[sustran] Re: Sustran-discuss Digest, Vol 74, Issue 5

[Ahuja, Sonal (Capita Symonds)]

Dear Hasan,

This paper may be useful

http://www.istiee.org/te/papers/N32/02%20van%20goeverden%20_5-25_.pdf

My argument in favour of subsidy for public transport is that all modes
or road transport including car are far from indirect subsidy either
(fuel or highway construction costs) so why should public transport not
get some contribution from government finances. 

If there is no subsidy for public transport there can be serious impacts
on service quality of public transport. In all cases even partial
private participation needs to be closely monitored and regulated to
guarantee quality of service to passengers. 

In particular in urban and regional transport a considerable decline of
services may be expected without subsidy for urban public transport.
Moreover, fares are bound to increase. Often taking subsidy out of
public transport is detrimental to low income groups and leads to social
exclusion of the people who need the public transport the most but
cannot afford it. Simon has highlighted some the issues with Delhi and I
would agree with Brendan's observations regarding impact of lowering
subsidies on public transport. 

The level of subsidy in public transport is eventually is not just an
economic but a political decision as well. 

With warm regards
Sonal

Sonal Ahuja
Associate Director, 
Development Transport and Infrastructure
CAPITA SYMONDS
24/30 Holborn, London EC1N 2LX
Tel: +44 (0) 20 7870 9300
Fax: +44 (0) 20 7870 9399
Mob: +44 (0) 77 88 666 523
Mail: sonal.ahuja at capita.co.uk
www.capitasymonds.co.uk 

Think of the environment. Print only if necessary.

-----Original Message-----
From: sustran-discuss-bounces+sonal.ahuja=capita.co.uk at list.jca.apc.org
[mailto:sustran-discuss-bounces+sonal.ahuja=capita.co.uk at list.jca.apc.or
g] On Behalf Of Brendan Finn
Sent: 09 October 2009 17:59
To: Simon Bishop; sustran-discuss at list.jca.apc.org
Subject: [sustran] Re: Sustran-discuss Digest, Vol 74, Issue 5

Dear Hassan, 

I am in agreement with the general direction of Simon's e-mail. The
Government of the Punjab is being unrealistic if it expects to get
anything resembling a quality public transport system without subsidy or
support funding. I guess if they give an exclusive franchise to a
company without any restrictions on coverage, service level, quality or
tariff, it could be possible, but that would not meet the needs of the
citizens. There is a common misconception among some politicians and
senior decision-takers that if you privatise bus services you don't need
to give any subsidies because the private sector is always profitable.
Alas, this does not hold true. 

There are two categories of urban public transport system that do not
require subsidies:

1) A few rare exceptions such as Hong Kong and Singapore which do not
receive Government money, but Government has created the conditions for
them to be profitable. 

2) Most cities in Africa and many in other parts of the world where
unregulated buses and paratransit provide services with low quality
vehicles and poor conditions for the workers. The quality of the service
itself varies but I don't think you will find in any of these cities
that either the citizens or the city authorities are pleased with what
they have even if it is functional. 

In my opinion, a city such as Lahore needs to set outs its goals first
and assess the value of achieving them. What sort of city does it want
to be? How important is transportation to that vision and how should its
people move? Will the city's economy function if traffic continues as it
is? Only then decide how to achieve it. 

A good public transport system which has reasonable coverage and service
levels will cost money (actually, even a bad one costs money). The
questions for the Government are:

a) What role does Government believe it should have in network coverage,
service design, vehicle specification, quality, etc.? Once it starts to
get involved, it must take some responsibility for the financial
outcomes.

b) What can it do to minimise the cost and maximise transportation
effectiveness? Well-enforced priority for buses is an obvious method
which boosts productivity, reduces unit costs, and makes the service
attractive to users.

c) What should be the balance of paying the costs between the customers
and the government? Is Government willing to allow price freedom to the
operators, or does it wish to provide tariff protection for some or all
users? If the latter, then it had better be prepared to contribute
something. 

But ultimately it boils down to figuring what a good PT system is worth
to the city, and what the alternatives cost. The alternatives can be
expensive freeway-construction, or cheap do-nothing in which the city's
resources are squandered in congestion and investments go to other
better-functioning cities and countries. When they know what they want
and what it's worth, it's a lot easier for them to figure how much they
would be willing to pay, and will recognise a good bargain if they can
get it for less. 


With best wishes, 


Brendan.
________________________________________________________________________
_______________________________________
Brendan Finn          e-mail : etts at indigo.ie          tel :
+353.87.2530286
----- Original Message ----- 
From: "Simon Bishop" <simon.bishop at dimts.in>
To: <sustran-discuss at list.jca.apc.org>
Sent: Friday, October 09, 2009 6:23 AM
Subject: [sustran] Re: Sustran-discuss Digest, Vol 74, Issue 5


> Dear Hassan,
> 
> I do not underestimate the size of the task you are embarking upon and
I wish you all the luck.  I was thinking about your question in some
depth and it made me think that your task might be even harder than you
think.  
> 
> In my experience it nearly always requires additional finance to have
a 'quality' public transport network.  In Delhi I have been working as a
consultant with Delhi Transit which has pushed the government to replace
the existing bifurcated system of a state monopoly that runs quite
inefficiently and requires regular top ups to be kept alive.  The other
is a fully private 'Blueline' system that breaks even but, to do so
requires cheap uncomfortable truck body buses running at high speed to
capture as many passengers as possible.  
> 
> Delhi Transit borrowed heavily from the London model to develop a
system of 17 zonal clusters in the city which would be franchised to the
lowest cost bidder.  The bidder would collect a per km fee for each km
run but in contrast to the state monopoly his/her performance would be
measured by GPS and an Operational Control Centre with a system of
rewards and penalties.  The fact was that this turned out to require
government support, but it was much less than the 650 million pounds or
so that is charged in London (back of the envelope figure = about 150
million pounds or 3 flyovers a year - the government are constructing 24
of these in the run up to the Commonwealth Games and already they are
becoming saturated).  
> 
> The government has stalled on taking on the commitment so far because
it says the charge is too much.  However, I would argue strongly, and
suggest that you too strongly consider looking at and arguing for a
performance-based bus system even if a subsidy is required.  
> 
> The first reason is that you will need quality performance to compete
with private vehicles and you will need to pay for it.  Think of ways of
raising the money like a cess on fuel or cross subsidization from
parking charges, even like Bogota, support from carbon credits.  Taxing
cars and motorbikes, I acknowledge, is difficult politically without a
viable public transport system available, but, if a plan were
constructed and in, say Year 2 a bus system was in place, it would be
possible to commit to raising money from private vehicles in that year
to pay back someone like the ADB or WB. 
> 
> The second reason is that the bus network will reduce costs elsewhere,
which, as part of your project you should independently quantify
(accidents, congestion, pollution, technology transfer, etc).  Even if
you think that the government will say, "All very well, but....." you
should think about 'playing the long game'.  There is fast approaching a
time when even the elite will be beleaguered by long traffic jams and
will start to realize that having a good bus system actually helps them
drive around more easily in their government cars - in India they're
Ambassadors, don't know what they are in Pakistan.  The elite will
eventually come to realize a subsidy is a small price to pay for their
comfort.
> 
> You could also mitigate some of the costs in the following ways.  I
notice in India the preponderance of cycle rickshaws that are totally
un-integrated in the public transit system.  At virtually zero cost you
could use them as 'feeder routes' to BRT, thereby reducing the costs of
running a bus-based service considerably and possibly employing more
people.  You could 'upgrade' rickshaws in your contract specification so
they are accessible, comfortable and desirable.  Another way to reduce
costs would be to develop what we are trying to develop in Delhi, a BRT
system that reduces ongoing costs by improving the efficiency of buses
spending less time in traffic for instance and increasing revenues from
a fast, competitive service.  
> 
> In the end I think we need to start asking the question, 'How much do
we want to pay for a quality public transport system rather than 'How
can we get it for free'?  'How can we mitigate some of these costs by
taking advantage of the strengths already existing in Asian cities,
para-transit, cheaper labor (non-existent in the Western world)?' Most
importantly, 'How do we COMMUNICATE these needs to our politicians so
they sanction the funds?'  You could start by looking at places like
London that have turned round their loss of bus patronage and improved
journey times by adopting quality performance models.
> 
> All the best,
> 
> Simon Bishop
> 
> 
> ----------------------------------------------------------------------
> 
> Message: 1
> Date: Thu, 8 Oct 2009 13:14:22 +0600
> From: Hassaan Ghazali <hghazali at gmail.com>
> Subject: [sustran] Lahore Transport Company Revisited
> To: cai-asia at lists.worldbank.org, sustran-discuss at list.jca.apc.org
> Message-ID:
> <c4ee40d0910080014m3f4517b7odcccd8d2f8cb655a at mail.gmail.com>
> Content-Type: text/plain; charset=ISO-8859-1
> 
> Friends,
> 
> With all due apologies for cross postings, I seek your assistance in a
task which has been assigned by the Honourable Chief Minister of the
Punjab to sort out some of the matters regarding the LTC which was
formed earlier this year.
> 
> We are reviewing the Motor Vehicles Ordinance, 1965 and amending them
to enable a sustainable financial and regulatory framework for the
public transport sector.
> 
> At this point I have two specific questions which are as follows:
> 
> (1) Is there any public transport system in existence which does not
rely on government subsidies or viability gap funding?
> 
> (2) If not, are there any examples or case studies of how financing
has been arranged and how this has been reflected in the tendering
process for procurement of buses?
> 
> Many thanks in advance.
> 
> Hassaan
> 
> Institutional Development Specialist
> The Urban Unit
> Planning & Development Department,
> Government of the Punjab
> 
> A: 4-B Lytton Road, Lahore, Pakistan
> T: 9213579-84 (Ext.116)
> F: 9213585
> M: 0345 455 6016
> Skype: halgazel
> http://www.urbanunit.gov.pk
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